May 1, 2013
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An HTC First phone with the new Facebook interface. / Marcio Jose Sanchez AP

by Jon Swartz, USA TODAY, @jswartz

by Jon Swartz, USA TODAY, @jswartz

SAN FRANCISCO - One of the popular parlor games in Silicon Valley - and there are many among its hyper-caffeinated, hyper-competitive denizens - is whether Facebook is handling the transition to mobile as adroitly as Google.

Mobile advertising is a crucial digital battlefield for both companies - especially Facebook, whose future revenue growth depends on its ability to squeeze money out of its approximately 750 million customers via smartphones and tablets.

Today, during its first-quarter earnings call, it offered vivid proof that it's on the right path. About 30% of Facebook's advertising revenue ($375 million out of $1.25 billion) - its highest percentage yet - came from mobile ads.

The social-networking giant is adding mobile users at a faster clip than from the Web and, in April, it teamed with HTC to begin selling a Facebook-centric smartphone. The logic: more photos and posts on Facebook means the potential for more mobile ads. Those ads accounted for nearly a fourth of Facebook's fourth-quarter revenue, up from 14% in the third quarter.

Google did not disclose mobile revenue its past two quarters, but analysts peg 14% of its total revenue came from mobile ads - twice what it was a year earlier.

Last year, Facebook became the No. 2 mobile ad publisher, by revenue, behind Google in the U.S. It took home 9.5% of a $4.1 billion domestic market in 2012. This year, its share is expected to grow to 13.2% of an estimated $7.3 billion market, according to eMarketer.

Still, Google's dominance of the mobile search market and strong showing in mobile display makes it the leader by a wide margin. The company's share of U.S. mobile ad revenue is expected to reach 54.7% this year, up from 52.8% in 2012.

The downside, however, is that mobile ads fetch lower rates than desktop ones. A report last year by Mary Meeker, a partner with venture-capital behemoth Kleiner Perkins Caufield & Byers, estimates mobile rates at one-third to one-fifth the value of desktop ads.

"A key item is: How fast is the user activity switching over to mobile and how is the monetization following?" asks Roger Entner, founder of Recon Analytics. "Right now, a computer user is a lot more valuable than a mobile user. How is Facebook going to close this gap - and how quickly?"

Just a year ago, when Facebook stumbled out of the gate with its IPO, some blamed concerns over its mobile strategy.

No more, say analysts.

In the past two years, Facebook has made significant strides in mobile advertising as brands see success with Facebook's mobile app, says Raj Aggarwal, CEO of Localytics, an app analytics and marketing company.